Representatives of the European Commission, national and European financial supervisory authorities and European consumer protection organisations were present for today’s public hearing in the European Parliament’s Economic and Monetary Committee (ECON) on mis-selling of financial products. The hearing is based on five studies on mis-selling of financial products commissioned by the ECON committee on the basis of our Green initiative and with the support of all political groups. The studies identify gaps in legislation, implementation and enforcement of EU consumer protection in financial markets.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“Protecting European retail investors from being sold overpriced or unsuitable financial products still requires great efforts from the EU and member states. Common European consumer protection standards and their enforcement must not lag behind market integration. The practice of some financial companies to shamelessly exploit inexperienced customers when saving or investing for their retirement must finally be put a stop to. Companies that sell their customers risky own company shares as savings products (self-placement) or sell index funds as actively managed funds (closet indexing) violate European law and must be held accountable. The EU Commission and European financial supervisory authorities must consistently enforce compliance with EU law in all member states. Urgent action is needed, for example, to improve the insufficient implementation of the Mortgage Credit Directive in Spain, Croatia, Hungary and Romania, where the studies identify shortcomings and possible breaches of law. EIOPA must rigidly investigate the usury profits in the distribution of payment protection insurance and, if necessary, take actions against its distribution. The mis-selling of financial products not only destroys individual livelihoods, but also jeopardises financial stability. Consumers need advice free from conflicts of interest, instead of a pile of paper with useless information. Bureaucracy does not replace cost-effective and efficient financial products.
It is essential to strengthen consumer protection in the current review of the European system of financial supervision. The European supervisory authorities need more powers and resources to ensure that retail investors can rely on equal protection and equal rights across Europe. National governments must no longer block these reforms in the EU Council of Ministers. The Commission’s draft law on collective redress is an important step towards enabling people throughout Europe who suffered financial losses due to mis-selling to defend themselves jointly and on an equal footing in the future”.
The recording of the hearing can be viewed here:
Links to the five studies on the mis-selling of financial products:
Subordinated Debt and Self-placement: http://www.europarl.europa.eu/RegData/etudes/STUD/2018/618994/IPOL_STU(2018)618994_EN.pdf
Marketing, Sale and Distribution: http://www.europarl.europa.eu/RegData/etudes/STUD/2018/618996/IPOL_STU(2018)618996_EN.pdf
Compensation of Investors in Belgium: http://www.europarl.europa.eu/RegData/etudes/STUD/2018/618998/IPOL_STU(2018)618998_EN.pdf